Core Insights - High Tide Inc. reported record financial results for Q3 2025, including significant increases in revenue, adjusted EBITDA, and free cash flow, demonstrating strong operational performance and market growth [2][5][6]. Financial Highlights - Revenue reached $149.7 million for Q3 2025, a 14% increase year-over-year and the fastest growth rate in seven quarters [6]. - Adjusted EBITDA was a record $10.6 million, up 11% year-over-year and 32% sequentially, marking the 22nd consecutive positive quarter [11]. - Free cash flow for Q3 2025 was $7.7 million, representing a 148% increase year-over-year and a 57% increase sequentially [5][11]. - The company achieved positive net income of $832 thousand, a 1% increase year-over-year, reversing a net loss of $2.8 million sequentially [5][11]. Operational Highlights - Same-store sales increased by 7.4% year-over-year, the fastest growth rate in two years, with a 12% market share in the five provinces where Canna Cabana operates [5][10]. - The company opened seven new Canna Cabana locations across Ontario, Manitoba, and Alberta during the quarter [10]. - Canna Cabana remains the largest cannabis retail brand in Canada with 207 stores, and the company is on track to exceed 300 locations [18][26]. Strategic Developments - High Tide completed the acquisition of a 51% stake in Remexian Pharma GmbH, enhancing its position in Germany's medical cannabis market [3][15]. - The company’s loyalty programs, Cabana Club and ELITE, have seen significant growth, with membership surpassing 2.15 million in Canada, a 39% increase year-over-year [19]. Market Position - High Tide holds a 12% share of the cannabis retail market in Canada, up from 11% the previous year, and continues to attract top Canadian cannabis brands [5][26]. - The average Canna Cabana store generates 2.1 times the revenue compared to peers, indicating strong operational efficiency [11].

Financial Performance - The company generated $137.8 million in revenue for the second fiscal quarter of 2025, an increase of 11% year over year, and 12% when accounting for one fewer day in the quarter [7][11][13] - Gross profit was $35.5 million, consistent year over year, with a gross profit margin of 26%, down from 28% the previous year [11][13] - Adjusted EBITDA was $8.1 million, marking the 21st consecutive positive quarter, although it decreased from $10.0 million in the previous year [11][13] - The company reported a net loss of $2.8 million, compared to net income of $0.2 million in the prior year [11][13] Operational Highlights - The company operates 200 Canna Cabana locations across Canada, maintaining its position as the largest cannabis retail brand in the country [6][11] - Daily same-store sales increased by 6.2% year over year, the fastest growth rate in five quarters [11][12] - Canna Cabana achieved a 12% market share in the cannabis retail market, up from 11% the previous year [11][12] Membership Growth - Cabana Club membership reached 1.9 million, a 33% increase year over year, with ELITE memberships surpassing 97,000, a 120% increase year over year [11][12][17] - Global Cabana Club membership exceeded 5.87 million, including 104,700 ELITE members [11][12][17] Strategic Initiatives - The company is in exclusive discussions regarding a transaction with a leading German medical cannabis importer and wholesaler, with due diligence in the final stages [5][22] - The company submitted a model project proposal to the German Federal Office for Agriculture and Food related to the study of commercial cannabis use by adults [7][22] Product Offerings - The company currently sells 67 cannabis and accessory SKUs across its brands, with plans for new product launches expected this summer [8][20] - The company continues to expand its white label product offerings under the Queen of Bud and Cabana Cannabis Co. brands [20]

Financial Data and Key Metrics Changes - High Tide reported record revenue for Q1 at $142.5 million, an increase of 11% year-over-year and 3% sequentially, reaching an annual run rate of approximately $570 million [38] - Adjusted EBITDA was $7.1 million, down 32% year-over-year and 14% sequentially due to initiatives aimed at future growth [45] - Consolidated gross margins were 25% in Q1, down from 28% year-over-year and 26% sequentially, impacted by the illicit market and the launch of the Cabana Club loyalty program [42][43] Business Line Data and Key Metrics Changes - The brick-and-mortar segment led revenue growth, up 17% year-over-year, representing the fastest growth in five quarters [16][38] - Same-store sales increased by 5% year-over-year, with a remarkable 142% increase from October 2021 to December 2024 [12][39] - The Cabanalytics Business Data and Insights Platform generated record revenue of $11.3 million, up 49% year-over-year [42] Market Data and Key Metrics Changes - High Tide maintained an 11% market share in total sales across the five provinces where it operates, consistent with previous performance [17] - The average Canna Cabana store achieved an annual revenue run rate of $2.7 million, significantly higher than the average peer revenue of $1.3 million [40] Company Strategy and Development Direction - High Tide aims to expand its store count to 300 locations in Canada and enter the German medical cannabis market [14][30] - The company is focusing on organic growth while remaining open to strategic M&A opportunities [25] - The Cabana Club loyalty program is a key component of the growth strategy, with a target of reaching 2.5 million members [14][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the cannabis industry being recession-resistant, despite economic volatility [18][66] - The company is optimistic about future growth, particularly in the German market, and is exploring various partnership opportunities [32][56] - Management noted that working capital investments turned free cash flow negative this quarter but expects to be free cash flow positive for the fiscal year [26][46] Other Important Information - High Tide's White Label strategy is showing promise, with over $0.5 million in sales from the Queen of Bud brand [27] - The company has successfully launched the Cabana Club globally, now boasting 5.66 million members [16] Q&A Session Summary Question: Changes in Germany's market conditions - Management confirmed commitment to enter the German medical cannabis market and is exploring alternative partnerships beyond Purecan due to recent political developments [52][56] Question: Consumer behavior and market share dynamics in Canada - Management indicated long-term ambitions to reach at least a 15% market share in Canada, with strong same-store sales growth and resilience against inflation [62][66] Question: Timeline for entering the German market - Management stated that they are in discussions with multiple partners and expect to enter the market in a couple of months, emphasizing the importance of selecting the right partner [75][76] Question: Impact of tariffs on business - Management reassured that 99% of their business does not cross the US-Canada border, minimizing tariff impacts, and that most accessories are sourced domestically [78][80] Question: E-commerce segment performance - Management acknowledged short-term headwinds in the e-commerce segment but remains optimistic about long-term growth potential, especially with the global Cabana Club initiative [92][95]